Style Consistency, Fund Flow and Performance: A Study on U.S. Mutual Funds

30 Pages Posted: 28 May 2015

See all articles by Russell B. Gregory-Allen

Russell B. Gregory-Allen

Massey University - Department of Commerce

Liping Zou

School of Economics and Finance, Massey Univeristy, Albany

Yiling Li

Independent

Date Written: May 27, 2014

Abstract

This research investigates the relationship between mutual funds investment style consistency, the future funds performance, and funds net flow. Using a large sample of actively-managed U.S. equity mutual funds from Morningstar database, for the period from January 2002 to December 2011, 5555 mutual funds are classified into nine style categories. Our results support the findings from existing literatures that style consistency is of vital importance to fund performance. Taking a different approach we find that more style consistent funds tend to have better long term future performance. However, results suggest that style consistency is not related to future funds net flows, indicating that investors do not pay more attention to style consistency when making their future investment decisions.

Keywords: Mutual funds, Style consistency, Fund performance, Fund flow

JEL Classification: G11, G24

Suggested Citation

Gregory-Allen, Russell B. and Zou, Liping and Li, Yiling, Style Consistency, Fund Flow and Performance: A Study on U.S. Mutual Funds (May 27, 2014). Available at SSRN: https://ssrn.com/abstract=2610968 or http://dx.doi.org/10.2139/ssrn.2610968

Russell B. Gregory-Allen

Massey University - Department of Commerce ( email )

Auckland
New Zealand

Liping Zou (Contact Author)

School of Economics and Finance, Massey Univeristy, Albany ( email )

Auckland, 0745
New Zealand

Yiling Li

Independent ( email )

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